2021 Global Economic Outlook

November 9, 2020

Jan Hatzius Goldman, Sachs & Co. +1 212-902-0394 jan.hatzius@gs.com

Chief Economist

V(accine)-Shaped Recovery

Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure

Appendix, or go to www.gs.com/research/hedge.html.

2Global Investment Research

Modest US Fiscal Stimulus Ahead

Note: discretionary policy includes additional unemployment insurance payouts, business support, household rebates, state and fiscal aid, and federal spending.

Source: Goldman Sachs Global Investment Research.

0

2

4

6

8

10

12

14

0

2

4

6

8

10

12

14

1 2 3 4 1 2 3 4

2020 2021

US Fiscal Support: Impact on GDP Level

Divided Government Baseline

Democratic Sweep Scenario

% of GDP % of GDP

0

2

4

6

8

10

12

14

0

2

4

6

8

10

12

14

1 2 3 4 1 2 3 4

2020 2021

US Fiscal Support: Impact on Budget Deficit

Divided Government Baseline

Democratic Sweep Scenario

% of GDP % of GDP

3Global Investment Research

Well Above Consensus in 2021 and 2022

Source: Bloomberg, Goldman Sachs Global Investment Research.

GS Consensus GS Consensus GS Consensus

2.2 -3.5 -3.9 5.3 3.8 3.8 2.8

0.7 -5.3 -5.6 3.3 2.5 2.0 1.5

1.3 -7.2 -7.7 5.3 5.2 4.3 2.6

Germany 0.6 -5.8 -5.8 3.7 4.4 4.2 2.7

France 1.5 -9.2 -9.5 7.0 6.6 4.7 2.7

Italy 0.3 -8.7 -9.8 6.0 5.5 3.6 2.6

Spain 2.0 -11.6 -12.0 7.1 6.4 6.4 4.3

1.3 -10.5 -10.0 6.1 5.5 7.3 2.9

6.1 2.0 2.0 7.5 8.0 5.7 5.4

4.9 -8.9 -9.0 10.0 7.4 7.2 6.9

1.3 -4.0 -4.0 5.0 3.0 3.0 2.3

1.1 -4.6 -5.2 4.0 3.5 2.9 2.5

3.0 -3.9 -4.0 6.0 5.2 4.6 3.7

2019

UK

Euro Area

2022 (f)

Real GDP Growth

Percent Change

yoy

Note: All forecasts calculated on calendar year basis. IMF forecasts used for India 2022

consensus when quarters not available in Bloomberg.

China

India

Russia

Brazil

World

2020 (f) 2021 (f)

US

Japan

4Global Investment Research

Covid Hospitalizations Are Surging in Europe

Source: Covid Tracking Project, Santé Publique France, Presidenza del Consiglio dei Ministri Dipartimento della Protezione Civile, Esri Canada, Ministerio De Sanidad, United Kingdom National Health

Service, Goldman Sachs Global Investment Research

0

100

200

300

400

500

600

700

0

100

200

300

400

500

600

700

Mar Apr May Jun Jul Aug Sep Oct Nov

US

UK

France

Italy

Canada

Spain

Daily Population Hospitalized for Covid per MillionHospitalized per Million Hospitalized per Million

5Global Investment Research

Another (Partial) Lockdown in Europe

Note: We extend the Oxford policy stringency index forward by accounting for announced restrictions. We forecast the Google mobility component using its history and relationship with the policy

component.

Source: University of Oxford, Google LLC "Google COVID-19 Community Mobility Reports", Goldman Sachs Global Investment Research.

0

10

20

30

40

50

60

70

80

90

100

0

10

20

30

40

50

60

70

80

90

100

Feb Mar Apr May Jun Jul Aug Sep Oct Nov

US

Euro Area (Big Four)

Index IndexGS Effective Lockdown Index (PPP GDP weighted, 7dma)GS est.*

6Global Investment Research

A Near-term GDP Setback, Especially in Europe

Source: Goldman Sachs Global Investment Research.

80

85

90

95

100

105

80

85

90

95

100

105

4 1 2 3 4 1 2 3 4

2019 2020 2021

Real GDP

US

Euro Area

Index, 2019Q4=100 Index, 2019Q4=100GS est.

7Global Investment Research

Strong Correlation Between Cases and Temperatures

Source: JHU CSSE, National Oceanic and Atmospheric Administration, Goldman Sachs Global Investment Research

Arizona

California

FloridaLouisiana

Montana

Nevada

New York

North Dakota

South Dakota

Texas

Wisconsin

y = -46.3x - 498

R² = 0.57

-600

-400

-200

0

200

400

600

800

-20 -18 -16 -14 -12 -10 -8 -6 -4 -2 0

West

South

MidWest

Northeast

Change in Average Temperature July to October ( C)

Change in

Ave

rage D

aily

New

Confirm

ed C

ases

per

Mill

ion F

rom

July

to O

cto

ber

8Global Investment Research

“Superforecasters” Still Expect a Vaccine Soon

Source: Good Judgement Project, Goldman Sachs Global Investment Research.

0

10

20

30

40

50

60

70

80

90

100

0

10

20

30

40

50

60

70

80

90

100

25-Apr 16-May 6-Jun 27-Jun 18-Jul 8-Aug 29-Aug 19-Sep 10-Oct 31-Oct

%%

Before 30 Mar 2021

1 Apr 2021

- 30 Sep 2021

After 1 Oct 2021

Before 20 Jan 2021

21 Jan -

21 Mar 2021

Apr -

May 2021

Jun - Sep 2021

Good Judgment Inc: When will enough doses of FDA-approved COVID-19 vaccine(s) to inoculate 25

million people be distributed in the United States?

9Global Investment Research

A Large Vaccine GDP Boost in the US and Europe

Source: Goldman Sachs Global Investment Research.

0.0

0.5

1.0

1.5

2.0

2.5

3.0

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Oct-

20

De

c-2

0

Fe

b-2

1

Ap

r-2

1

Ju

n-2

1

Au

g-2

1

Oct-

21

De

c-2

1

Fe

b-2

2

Ap

r-2

2

Ju

n-2

2

Au

g-2

2

Oct-

22

Estimated Impact of Vaccine on Real GDP Level

US

Euro Area*

China

Percent Percent

* Euro Area: Germany, France, Spain and Italy.

10Global Investment Research

So Far, So Good in the Job Market Recovery

Source: Goldman Sachs Global Investment Research.

0

2

4

6

8

10

12

14

16

0

2

4

6

8

10

12

14

16

2006 2008 2010 2012 2014 2016 2018 2020

Unemployment Rate

US

Canada

Euro Area

UK

Japan

% of labor force % of labor force

11Global Investment Research

Bankruptcies Have Been Remarkably Low in 2020

Source: Haver Analytics, Serasa Experian, Goldman Sachs Global Investment Research.

0

20

40

60

80

100

120

140

160

180

0

20

40

60

80

100

120

140

160

180

Dec Jan Feb Mar Apr May Jun Jul Aug Sept Oct

Index, 100 =

Prior Dec.

Index. 100 =

Prior Dec.

Bankruptcies in 2008 Financial Crisis and 2020 Pandemic

2008 Median (Interquartile Range)

2020 Median (Interquartile Range)

12Global Investment Research

A Dead Cat Bounce in Core Inflation

Source: Goldman Sachs Global Investment Research.

-1

0

1

2

3

-1

0

1

2

3

2019 2020 2021 2022 2023 2024 2025

Core* Inflation

US Canada Australia

UK Euro Area Japan

Percent Percent

13Global Investment Research

DM Policy Rates Locked on Hold for Years

-1

0

1

2

3

-1

0

1

2

3

2019 2020 2021 2022 2023 2024 2025 2026

Policy Rate

US Canada

Australia UK

Euro Area Japan

Percent Percent

Source: Goldman Sachs Global Investment Research.

14Global Investment Research

China GDP Has Fully Recovered from the Covid Hit

Source: Goldman Sachs Global Investment Research.

85

90

95

100

105

85

90

95

100

105

1 2 3 4 1 2 3

2019 2020

Index, 2019 Q4=100 Index, 2019 Q4=100China Real GDP

15Global Investment Research

China Macro Policy Is Exceptionally Easy

Source: Goldman Sachs Global Investment Research.

-22

-20

-18

-16

-14

-12

-10

-8

-6

-4

-2

0

-22

-20

-18

-16

-14

-12

-10

-8

-6

-4

-2

0

2009 2011 2013 2015 2017 2019 2021

3mma

12mma

GS 12mma Forecasts

% of GDP % of GDPChina Augmented Fiscal Deficit

16

Disclosure Appendix

November 9, 2020

17Global Investment Research

Reg AC

I,Jan Hatzius, hereby certify that all of the views expressed in this report accurately reflect my personal views, which have not been influenced by considerations of the firm’s business or client relationships.

Unless otherwise stated, the individuals listed on the cover page of this report are analysts in Goldman Sachs’ Global Investment Research division.

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